It has recently been reported that the restaurant chain Z’Tejas has filed for Chapter 11 bankruptcy. According to the bankruptcy filing, the company, founded in Texas in 1989, owes $9.3 million to over 200 creditors. One of the company’s debts includes a $17,448.61 bill that it owes to the City of Austin for utilities.
The company was founded in Austin in 1989 and has three restaurants in the city, including one restaurant on downtown Austin’s famous 6th Street. The company owns a total of nine restaurants in the Southwest, and it moved its headquarters to Arizona in 2007. While under Chapter 11 bankruptcy protection, it will not be obligated to liquidate its assets or shut down its restaurants. There have been no reports about whether the company will have to do any layoffs or wage cuts.
According to reports, part of the debt restructuring that Z-Tejas will do under Chapter 11 bankruptcy is to conduct a sale to a party called ‘Cornbread Ventures.” The sale is supposed to bring in $725,000 for Z’Tejas and allow it to avoid liquidation bankruptcy. Over the last few years, reported annual revenues for Z-Tejas were between about $33 million and $36 million.
Chapter 11 bankruptcy is different from Chapter 7 bankruptcy, because it allows a company to stay in business rather than liquidate all of its assets. About 9,000 businesses file for Chapter 11 bankruptcy every year, and most of them emerge successfully. A lawyer may be able to help business clients who are overwhelmed by financial obligations to determine if their company qualifies for Chapter 11 bankruptcy protection.
Source: kxan, “Popular Austin restaurant chain Z’Tejas files for bankruptcy,” Dave Byknish, July 25, 2015